Germany unions

Our discussion of the apparently contradictory relationship between a conservative government and the major trade unions in Germany might benefit from a clarification.

We need to strip our understanding of any sound-bite political convictions and look at what every skilled worker knows, but doesn’t tell because it comes to him as natural as breathing. How he works every day.

(I’m here indebted to my neighbour that is a goldsmith by trade for an insight that made me wiser on economics.)

It starts with the toolbox – very often the first assignment an apprentice gets: Make your own toolbox! A skilled worker can use many more tools than are in his toolbox, some tools are used so rarely, that it simply isn’t rational that all in a shop has all the personal tools that are used in everyday work. This means you have to borrow from each other every single day: Together you have a full set of tools.

If a jerk isn’t in the union he will very quickly find it very difficult to borrow and he is left out in the cold and can’t work: Please not that a craftsman’s tools are his personal property (it might be paid for by the employer – and added and deducted from his income – make tax accountants crazy).

The popular notion of a strike is the shop “downs tools” – they do no such thing: They put them very meticulously into the toolbox and walk – with dignity and self assurance – to the nearest watering hole (before facing the real and serious music – the spouse – actually it is the wives that ends strikes). But it means that scabs don’t stand a chance: It is very unlikely that scabs have the necessary tools to continue production.

This principle continues to a higher level in guilds where the master craftsmen cooperate on particular jobs – to firms outsourcing particular operation to their competitors. Travellers in European cities might wonder why different trades tend to bunch up in particular streets and quarters. Diamond dealers tend to live on top of each other, as the goldsmiths need to have a particular set of stones to make a particular commission. This cultural annoyance to economists and marketing people is the economist not understanding a thing of what they are dealing with. A marketing consultant wants the shop to be distributed all over town – but some things are not sold, they are bought.

A goldsmiths display space is the heaving cleavage of trophy wives – that’s where the money makers look -and their wives (checking out the competition) – and getting expensive ideas: That is how fashion comes about! These factors also explain why so many craftsmen through time marry their master craftsman’s widow. It is actually his masters toolbox he is after (the lewd pun was not intentional; but probably more than a coincidence – craftsmanship is definitely hands on!).  And his wife inherits the shop with the tools. ) His master was only able to provide for a wife at a late point in life – it takes time to build up the skill and finance tools – professional tools are never cheap.

What trade have these things with unions and tariff agreements? Everything.

The importance stretches from the insignificant as with hairdressers where the tools are few and relatively cheap – any office drawer will do (I know that from experience). Then over some as in the violin maker, where the tools are relatively inexpensive (a violin makers plane is the size of a thumbnail) but the range is wide – a lot of cases where a minute operation requires a specialised tool. Goldsmith are somewhat medium – mainly a wide range of tools at moderate cost.

Carpenters do need a rather narrow range; but we are talking rather expensive stuff for f.i. a modern furniture producer. A machine shop quickly develops into a small and specialized factory with about a hundred souls. That was the real disaster for Detroit and Flint when the big car manufacturers closed:  All their minor suppliers (brake liners and so on) closed as well.

As we progress from where the tools are relatively unimportant the more the individual skill means. The aforementioned – in time rather dented (or bulging) – trophy wife MUST have René to do her hair. The more the individual skills mean the smaller the growth potential is – but that has nothing to do with profitability. A chain of restaurants is a contradiction in terms – which Gordon Ramsey is finding out (in burger chains skill is a distinct disadvantage). In skill oriented trades the main problem is the individual piecework agreements – once that is in place – then the hourly wages are a matter of agreement between union and employers organisation. In a mass production industry the time consumption is measured with very high precision and the hourly wage is less important, at the skilled craftsman is usually finished before time.

On the higher level: The more capital intensive the production is and thus the tools are “borrowed” from the employer the only thing left to judge is the relationship between the value of the different trades (the individual and personal variations are worked out between the workers themselves) – thus you get trade unions – and their negotiations are very technical as to the merit of various types of work. The different trades have actually to a large extend neither the mutual insight to enter into a qualified discussion among themselves and can only form a united front on the hourly wage level (how you arrive at the measurement of hours worked is –again – a trade discussion).

At some point in history it was believed that the scale of production would outweigh the differences in trade: This schism is reflected in the American labour movement: American Federation of Labour (a bunch of trade unions) – Congress of Industrial Organizations where the differences between the trades were considered of relative minor importance than the product line.

The CIO bid was – if not wrong – then not as practical, as a craftsman fairly easily can jump from one employer to another and the loyalty to the trade is higher than to how the employers carve up their markets. The worker is more dependent on his colleagues than on the employer.

Despite attitudes to the contrary employers are actually dependent on the unions to iron out internal differences thus reducing vulnerability in their production to drama queen smaller crafts in a given production facility (and they will always be there). Bismarck once said something like this: “Employers and employees ultimately have common interests the capitalist wants his workers to buy his products and the workers want the products. The argument is who gets his share first.” Well German industry must have gotten something right – they are exporting industrial product to the newly industrialised world.

Finally to tie the knot to the beginning: Few would have called Ronald Reagan a raving communist – least of all those in the Soviet Union – but I think the Hollywood Studios weren’t so sure. So maybe the German tariff negotiations make more sense, than you should

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